Back to the Future: Lösch, Isard, and the Role of Money and Credit in the Space-Economy

Abstract

The recent financial crisis has been a powerful reminder that the intersectoral flow of funds is also—always and everywhere—a local phenomenon with real effects. Yet, the contemporary canon of regional economic theory has enshrined the classical dichotomy, treating the spheres of money and production as analytically distinct. Consequently, the current literature has little to say about monetary phenomena and their spatial consequences. The widespread disengagement of regional scientists with respect to issues of money, credit and banking represents a radical break with the discipline’s intellectual origins over half a century ago. This chapter re-examines the monetary content of some of the foundational works in regional science. In particular, I argue that August Lösch and Walter Isard, the former a student of Joseph Schumpeter’s and the latter a student of Alvin Hansen’s, both represent important branches in the long lineage of twentieth century continental and U.S. monetary thought, respectively. In doing so, this chapter also outlines key elements of a research agenda that reengages with regional aspects of money and credit, casting them as central pillars of a Lösch-Isard synthesis.

Notes

Acknowledgements

I thank the editors, Randy Jackson and Peter Schaeffer, for their detailed comments and encouragement on previous versions of this chapter. I am indebted to Scott Campbell for rich discussions of the intellectual history of regional science which were critical to my understanding of the Lösch-Schumpeter connection. I am also grateful for input from seminar participants at West Virginia University’s Regional Research Institute and at Virginia Tech, and from session participants at the 2015 Regional Science Association International meetings (Portland, OR), the 2016 Association of American Geographers meetings (San Francisco, CA), and the 2016 History of Economic Society meetings (Durham, NC).

Beckworth D (2010) One nation under the Fed? the asymmetric effects of US monetary policy and its implications for the United States as an optimal currency area. J Macroecon 32(4):732–746CrossRefGoogle Scholar

Bell S (2001) The role of the state and the hierarchy of money. Camb J Econ 25(2):149–163CrossRefGoogle Scholar